Oracle on hiring spree, sees ‘budget flush’

Tougher competition in world of cloud, software-as-service

SAN FRANCISCO (MarketWatch) — Oracle Corp. posted robust results on a year-end IT spending wave, as the tech giant also said it is beefing up its workforce in the face of stiffening competition.

Oracle
ORCL, -0.67%
beat Wall Street’s projections for its fiscal second quarter, which sent its stock rising 3.7% to close at $34.09 on Wednesday. The report also bolstered expectations of a year-end “budget flush” as corporations spend more on IT systems and gear.

“Oracle’s comments bode well for most of the technology vendors as year-end budget flush seems to be under way,” Mizuho Securities analyst Abhey Lamba wrote in a note.

Reuters

Oracle CEO Larry Ellison

In Tuesday’s call with analysts, Oracle co-President Safra Catz said “things are going well. Folks want to close deals. Folks want to close deals in November. They want to continue to close deals now in December. It’s good, so far, so good.”

Still, the wave of IT spending was not enough to give a meaningful lift to Oracle’s hardware business, even though the company once again posted strong gains in software sales.

Faced by stiffer competition in both the hardware and business applications markets, the company said it is expanding its workforce.

“We’re actually still hiring,” co-President Mark Hurd told analysts. “We plan to hire more because as we specialize the sales force, it actually creates a need for us to have more people. We’re hiring in our verticals. We’re hiring in cloud. We’re hiring in every single region.”

“Again, I’ll put out on this call, those of you that have talented people that are looking for a great company to join, please send us their resume because we’re looking for great folks,” he said.

The hiring spree has paid off, according to Wedbush analyst Steve Koenig.

Oracle, he wrote in a note, “appears to be getting productivity from its sales hires, while the company’s broad product offerings and sales talent give Oracle a good deal of protection from a difficult software demand environment in the second half of 2012.”

But the expansion also underscores the challenges Oracle faces in the business-software market which is undergoing a shift.

The company has been competing more intensely with smaller players such as Salesforce.com Inc.
CRM, -0.06%
and Workday Inc.
WDAY, -2.01%
which embraced the software-as-a-service model in which customers pay a subscription typically based on the number of users. Traditional software players, led by Oracle, make money by charging hefty licensing and maintenance fees.

Oracle also has embraced the software-as-a-service model and is emphasizing its own strengths in cloud computing which allows customers to tap computing capacity through a network instead of in-house data centers. That shift has been tricky for Oracle given that its sales force are accustomed to the old way of getting customers to sign up.

Google Maps better than ever

(5:48)

The new iPhone version of Google Maps isn't just better than Apple Maps, but also better, in most respects, on the iPhone than it is on Android phones. Walt Mossberg joins digits to discuss.

“I think they can succeed in the transition, but it will take some time,” IDC analyst Crawford Del Prete told MarketWatch. “They are getting aggressive with the sales force which is part of the equation, but also they will likely need to continue to acquire software-as-a-service companies in order to build out there SaaS portfolio.”

On a positive note for Oracle, Cowen analyst Peter Goldmacher said competition with smaller players has not significantly hurt the company’s maintenance revenue.

“We have been worried for a long time about lower cost competitors with more compelling technologies, and while this dynamic has affected the company’s top-line growth rate, it has yet to noticeably impact maintenance revenues, Oracle’s golden goose,” Goldmacher said in a note.

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information. Intraday data
delayed per exchange requirements. S&P/Dow Jones Indices (SM) from Dow Jones & Company, Inc.
All quotes are in local exchange time. Real time last sale data provided by NASDAQ. More
information on NASDAQ traded symbols and their current financial status. Intraday
data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. S&P/Dow Jones Indices (SM)
from Dow Jones & Company, Inc. SEHK intraday data is provided by SIX Financial Information and is
at least 60-minutes delayed. All quotes are in local exchange time.